Signup surge raises hopes, questions

Enrollment through the state and federal insurance exchanges topped 1.1 million in January, providing further evidence that the marketplaces have largely recovered from the bungled Obamacare launch.

During the first four months of the open enrollment period, nearly 3.3 million individuals signed up for coverage, according to figures released by HHS last week. That includes 1.9 million through the federal HealthCare.gov website and 1.4 million through the state-run exchanges in 14 states and the District of Columbia.

That is more than halfway toward the Congressional Budget Office's downgraded projection of 6 million enrollments by March 31, though the pace of enrollments is still 25% behind CMS projections. (Originally the CBO projected 7.1 million enrollments by March 31.) But for the first month since the exchanges opened for business on Oct. 1, enrollments in January topped expectations. States varied widely in achieving projected enrollment, with Connecticut far exceeding its target and Massachusetts falling far short.

The continued brisk enrollment pace is particularly notable because many experts anticipated a significant drop-off in signups during January. That's because many individuals with significant health problems scurried to select a plan by the end of December so they could have coverage at the start of 2014.

“I don't think anybody expected January would be quite this strong,” said John Holahan, a health policy expert with the Urban Institute. “You can't see it as anything other than a pretty good sign.”

Momentum was particularly strong for the federal exchange. Nearly 40% of all enrollments through HealthCare.gov occurred last month. For the state exchanges, that figure was roughly 30%.

The positive enrollment news for the Obama administration comes with potentially major caveats. HHS has not released data on how many individuals have made their first premium payment. That likely means that a significant number of individuals who selected a plan through the online marketplaces aren't actually covered. The New York Times reported last week that about 1 in 5 applicants did not pay their premium on time and therefore did not receive coverage in January.

“These figures that HHS is putting out are padded,” said Seth Chandler, an insurance expert at the University of Houston Law Center.

In addition, no comprehensive numbers have been released showing how many of the individuals who signed up for coverage were previously uninsured. A study by McKinsey & Co. looking at the first 15 weeks of enrollment found that just 11% of enrollees were previously uninsured. But some experts say that's misleading because coverage typically was unstable in the pre-Obamacare individual market.

While HealthCare.gov has largely overcome technological problems that prevented individuals from signing up for coverage, a number of state exchanges continue to experience debilitating glitches. Online marketplaces in Hawaii, Maryland, Massachusetts, Oregon and Vermont, in particular, have been plagued by lingering problems.

There also are continuing concerns about the demographic mix of exchange customers. HHS officials highlighted the fact that 27% of exchange customers in January were between the ages of 18 and 34, a highly sought age group because younger people generally are healthier and will help keep total costs down. That was up from 24% during the first three months of enrollment. But the figure is well below the 40% threshold that most experts believe would bode well for establishing a balanced risk pool.

HHS for the first time released data on the level of coverage selected by exchange customers. Sixty-two percent opted for midrange silver-tier plans, designed to cover 70% of medical costs. There were fears that too many people, especially healthier folks, would choose skimpier bronze plans.

Ceci Connolly, managing director

of PricewaterhouseCoopers' Health Research Institute, argued that the high rate of choosing silver-tier plans is evidence that consumers are making informed choices since lower-income people can't get federal cost-sharing subsidies if they opt for bronze. “In the vast majority of cases the smarter move, the better deal, is silver or up,” Connolly said.

Whether the enrollment momentum will continue through March 31 remains to be seen. The University of Houston's Chandler says predictions hinge on whether you think everyone who wants insurance already has signed up or whether you believe there will be another deluge of signups before individuals face a tax penalty for failing to enroll by that deadline.

Follow Paul Demko on Twitter: @MHPDemko